Wednesday, 30 May 2012

Google’s come up with its solution for Dropbox: If you can’t buy ‘em, copy ‘em. The search engine and online advertising giant replaced its popular Google Docs service with Google Drive, a cloud computing storage service designed to directly compete with start up Dropbox. This raises the question, has Google become the new Microsoft?Us ancient folk who remember the 1990s and the Microsoft anti-trust trial can certainly notice some parallels. A big, dare we say monolithic, company doesn’t bother innovating on its own. It just waits for other companies to innovate, makes some changes for legally significant distinctions and enters into competition with the innovator. Sound familiar?Still, Google is not unchallenged in its supremacy. Bing has gained a bit of traction as a search engine, showing that Microsoft isn’t dead or stagnant by any means. Yahoo! is always trying to regain its place in the search engine world. And not everything Google does comes across as the Second Coming in the market. Google Plus+ currently has fewer subscribers than MySpace, if that tells you anything. So it’s by no means a done deal that Google Drive is going to push Dropbox and other upstarts out of existence.But Google has enormous resources, underscoring a fundamental problem of the free market: Google can offer an inferior product and sell it at a loss for years, effectively starving the competition out of existence. Further, an attempt to sue them for a breach of IP isn’t hopeless, but is obviously an uphill battle. Would anyone argue that Dropbox can hire a team of lawyers as impressive as the one that Google can enlist?The free market is often touted as the perfect place for innovation. However, Google’s entry into the world of cloud computing emphasizes one of the key limitations of the free market: larger companies can find legal ways to rob smaller ones of the core of their innovation and can comfortably afford to take a loss on the product for decades. Thus, the idea that the free market raises the cream to the top, letting inferior products fall by the wayside is more of a superstition than anything resembling actual reality.Further examples? Well, Betamax was largely considered a superior product to VHS. Ditto on HD-DVD versus Blu-Ray. At the end of the day, it didn’t matter. The format with the most connections and best marketing was the one who prevailed. In fairness, the market still allowed us to have a videotape format and an improvement upon DVD technology. But while the market threw up the best of the best, it did not allow the superior product to prevail.Google can’t bully everyone. Its main competitors in the world of tech are Microsoft, Facebook and Apple. Google can try to push those companies around, but it likely won’t do a whole lot. Still, this doesn’t contradict anything said above. Indeed, it underscores the broader point being made: Only companies with the resources and connections of Google are able to push back against them. This hardly makes for a good environment for innovation.